SANTA FE — Moongate Water Co., which served thirsty parts of the desert when nobody else would, argued Monday before the New Mexico Supreme Court that the city of Las Cruces stole its chance to flourish.

Steven Tucker, a lawyer representing Moongate, said Las Cruces did not take the water company's pumps or pipes or even any of its existing customers.

But when the city annexed three subdivisions that were in Moongate's service territory, the company lost something just as important — the opportunity for more business, Tucker told the five justices.

In an interview after the hearing, Tucker said Moongate calculated a loss of $3 million in potential customers to which it had an exclusive right.

Tom Bird, an attorney representing Las Cruces at the hearing, said the Legislature intended that there be competition in cities for water service. Las Cruces, with 99,600 people, is not a place where a regulated utility gets a monopoly on the marketplace, he argued.

"This case, in my view, is wonderfully abstract," Bird said.

He meant that Moongate could show no actual losses, but sued when the city became a competitor for new business. Moongate, he said, did not even claim monetary damages in this lawsuit, which dates back six years.

Justice Charles Daniels challenged Tucker's argument that Moongate had a property right to territory the city invaded.

"The analogy doesn't really hold up here," Daniels said.

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"I'm not sure you have established that you have a right exclusive of the city."

But Justice Richard Bosson asked if cities could expand as they pleased and take everything, irrespective of private competitors.

"That's a good point. I wish I had made that one," said Tucker of Moongate.

Public utility regulators in 1984 gave Moongate authority to provide water service in an unincorporated section near Las Cruces. In that era before explosive growth, the city government declined to provide service outside its borders.

Moongate, Tucker said, received a certificate of convenience and necessity to serve areas that the city would not.

The situation changed when Las Cruces annexed part of Moongate's service area, which covered the subdivisions of Dos Suenos, Los Enamorados and Rincon Mesa.

Moongate sued for invasion of territory. The city countered that all it had done was compete for a new base of customers.

But other state law had named Moongate as the water company for that territory. One aspect of the case is that laws about territorial rights seem to conflict with the city's right to expand water service.

Bird predicted a win for the city.

"I'm confident the Supreme Court will apply the law correctly," he said.

The case was just the second for Justice Barbara Vigil, who was elected to the Supreme Court a month ago and sworn in Friday. She and the other justices probably will issue a written decision in six months to a year.

Milan Simonich, Santa Fe bureau chief of Texas-New Mexico Newspapers, can be reached at 505-820-6898. His blog is at nmcapitolreport.com.